Gold exchange traded funds such as the SPDR Gold Shares (NYSEArca: GLD) and the SPDR Gold MiniShares (NYSEArca: GLDM) are positioned to continue shining after Election Day, particularly if dollar-destructive economic stimulus is unleashed.
Gold investors need to ensure their safety belts are buckled tight this week, with the forthcoming election week offering the possibility of stomach-churning volatility. Other key movers for gold will only add to the dips and dives.
“Futures prices for gold have already climbed by 57% since the day Republican President Donald Trump took office on Jan. 20, 2017. On Nov. 2, prices settled at $1,892.50. They are up around 24% year to date, after touching a record high of $2,069.40 in August,” reports Myra Saefong for Barron’s.
Gold ETFs for Any Outcome
Attention in the capital markets is strictly focused on whether investors can count on more stimulus measures before the forthcoming U.S. presidential election. Gold is as steady as she goes pre-election, but with rising coronavirus cases, can it tick higher before voters head to the polls?
“The combination of high risk and the low opportunity cost of holding gold have been important factors overall, he says. U.S. bond yields trade significantly lower year to date, reducing the relative opportunity cost of holding gold, and making the metal a more attractive investment,” according to Barron’s.
Meanwhile, the copious amounts of fiscal and monetary stimulus measures have inundated the markets with cash, fueling demand for physical assets like the hold that can help investors maintain their purchasing power.
Historically, gold performs better when a Democrat is in the White House, but it’s hard to ignore the fact that GLD and GLDM are among this year’s best-performing commodities ETFs with a Republican in the Oval Office.
“A Biden win, meanwhile, could lead to concerns over higher taxes and larger budget deficits, and corrections in the stock market, he says. Large deficits can boost gold’s appeal as a haven investment,” according to Barron’s. “In the case of a contested election, or unclear outcome for a period of time, that would likely result in an uncertain period for financial markets.”
GLD and GLDM would be prime beneficiaries of a drawn out, contested vote counting process.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.